When the latest recession in the U.S. officially ended in March 1991, workers had reason to hope for better times. Mindful that unemployment, which had risen to 6.7% from 5.5% during the nine-month downturn, traditionally falls during an economic recovery, unemployed workers were optimistic about their job prospects. Usually factory managers, service providers, and other employers would begin calling furloughed workers back to their old jobs and start hiring new employees to meet the growing demand for their goods and services.

Weak U.S. Recovery

The sluggish recovery, however, was a disappointment to those who had counted on history’s repeating itself. The recovery was unexpectedly anemic, undermined in large part by the cuts in defense spending that accompanied the end of the Cold War. During the early months of 1992, unemployment actually rose to 7.8%, earning this upturn a reputation as the "jobless recovery."

The news, however, was not all bad. By mid-1993 almost two million new jobs had been added to the U.S. economy, and by August unemployment had fallen to 6.7%. But those optimistic statistics belied a more dismal trend: fewer laid-off workers were being called back to their old jobs because those jobs had disappeared for good. In addition, the kinds of positions workers had to choose from were in many ways less attractive than those offered in the past. Well-paid, full-time manufacturing jobs with generous benefits--the backbone of the U.S. postwar economy and the road to the middle class for millions of Americans--were scarce. Many unemployed workers had to settle instead for part-time or temporary positions with relatively low pay and often no benefits. By 1993 as many as 37 million Americans--more than a quarter of the workforce--held part-time or temporary jobs. All indicators pointed to the trend toward such "contingent" work as continuing well into the 1990s.

Corporations Restructure

The change in the quality and quantity of jobs available in the U.S. occurred because of a widespread and profound restructuring of U.S. industry, a movement that had been under way since the early 1980s. Faced with growing competition from foreign producers, U.S. companies were forced either to become more efficient or to go out of business. In searching for ways to save money, corporate giants of virtually every industrial sector automated assembly operations, weeded out unnecessary layers of management, sold off less productive divisions, and transferred operations to countries where workers are paid low wages. The effects of this corporate restructuring on U.S. workers have been wage and salary freezes, cuts in fringe benefits, and, in many cases, unemployment. The Congressional Budget Office reported that on an annual average, two million full-time workers lost their jobs during the 1980s.

Unfortunately for the country’s 118 million workers, the restructuring continued into the 1990s, affecting a broad range of industries. In 1993, well into the recovery, a succession of corporate giants announced that they would lay off tens of thousands of employees. The list included such household names as computer manufacturer IBM (85,000 workers), automaker General Motors (80,000), retailer Sears, Roebuck & Co. (50,000), aerospace manufacturer Boeing (30,000), consumer-goods producer Procter & Gamble (15,000), and telephone company U.S. West (9,000). Tens of thousands of government workers also joined the jobless rolls, victims of budget-cutting efforts at the federal, state, and local levels.

More Americans were being squeezed out of the traditional "core" workforce--full-time employees making a decent living at one job that offered health insurance, pension coverage, paid vacation, and other fringe benefits. Typically, core workers also enjoyed some degree of job security, with the implicit promise that as long as they performed their jobs competently, they would remain with the firm, perhaps advancing in rank and income, until retiring with a comfortable pension. In the past when companies went out of business, many full-time, permanent workers found new jobs offering equivalent earnings and benefits.

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